Palestine Pulse

Does draft Palestinian social security law really protect workers?

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Article Summary
The draft social security law has been widely criticized for failing to provide workers sufficient retirement pensions or protection in cases of work-related disability.

RAMALLAH, West Bank — Work on a Palestinian social security law began in October 2012, and the first draft was submitted July 27, 2015, to the Council of Ministers by the committee ​selected to develop it. The draft presented had shortcomings that required further amendment. The final version of the law was submitted in December to the Council of Ministers, which is expected to ratify it and send it to the president for signing.

The law covers issues related to retirement benefits, maternity leave, disability and payments to families of deceased workers and compels companies to make contributions to the Social Security Fund on behalf of their employees. The draft law comes at a time when Palestinian workers are suffering hardships and dire conditions, with no guarantees of financial security. The minimum wage law is not being enforced, and Palestinians face rising unemployment and difficulty being allowed to work in Israel.

Criticism of the social security law has been leveled by representatives of workers unions, who are divided between those who view it as better than nothing despite its shortcomings and others, the majority, who think its shortcomings undermine the concept of social security. The proposed retirement funds — which the committee supposedly set at the minimum wage, 1,450 shekels a month ($366), which is also the poverty line — are not commensurate with the cost of living and difficult economic conditions in general for Palestinians. In fact, critics argue, monthly payments would fall well below the poverty line under the draft plan.

Ibrahim Dhouib, a member of the General Secretariat of the Palestinian General Federation of Trade Unions, told Al-Monitor, “The idea behind the law is to offer security to workers in case of disability and old age, neither of which is addressed in this law. The wage percentage received by workers whose employment has ended is greatly below their respective salaries and therefore cannot cover expenses. We expected these fundamental deficiencies to be addressed during discussions pertaining to the draft law, which, in its current form, does not achieve the objectives for which it was legislated in the first place.”

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The draft law was penned by a 35-member committee appointed by the Council of Ministers and representing various sectors and interests. Among its members were Shaher Saad, secretary-general of the Palestine General Federation of Trade Unions; Ahmed Majdalani, a Palestine Liberation Organization Executive Committee member; and Jamal Jawabra, president of the Chamber of Commerce in Ramallah.

On Dec. 2, the committee issued a statement announcing the completion of the draft and its planned delivery to the prime minister, a sign of the impending inauguration of the social security system. The statement came amid calls by workers and their representatives that ratification of the law be postponed until amendments are made to deal with its deficits. Majdalani nonetheless anticipates that the draft will be adopted by the Council of Ministers and then submitted to the president for signing into law within the next two months.

Under the statute, beneficiaries encompass all workers who are covered by the Palestinian Labor Law, private sector workers excluded from the provisions of the Public Pension Law and the Security Forces’ Wage Law, as well as some Palestinian employees of international organizations. According to Majdalani, the law provides social security to workers in the form of a national safety net and should be regarded as a support mechanism facilitating the Palestinian people’s steadfastness and ability to remain on their land and confront Israel’s displacement policy.

Majdalani’s contention that the law offers workers protection was met with skepticism by Muhammad al-Arouri, president of the World Solidarity Organization. In an interview with Al-Monitor, Arouri said, “The law, in its current iteration, does not protect workers from wage erosion and the high cost of living [in retirement]. It also does not guarantee an equitable distribution of income. We think that there was collusion between employers and the government to adopt it in its current form.”

Arouri asserted that labor unions and organizations involved in protecting workers’ rights will not quietly go along with the law's adoption because it violates basic employee rights. He added, “Unions and rights activists are waging a war to have the law withdrawn from the Council of Ministers and resubmitted” to the council after revision.

The key point of contention, according to Arouri, is the issue of contributions based on workers' wages, with the workers' share amounting to 7.5% and employers' 8.5%. According to Arouri, the figures were those preferred by business owners, and do not provide workers any added benefits beyond those guaranteed under the current labor law for end of service compensation. In addition, employers provide insurance in case of work-related injuries.

Arouri compared the Palestinian draft law to its Jordanian counterpart. In Jordan, employers pay half the workers' contribution, which is 1.7% of workers' base salary, but employees' pensions on average are higher than their salaries at the time of retirement. The Palestinian plan, also based on 1.7% of base pay, affords employees an average net monthly pension of 700 shekels (about $179), which is far below the poverty line of 1,450 shekels. Meanwhile, the formula for Palestinian public sector workers, who are not covered by the law, is based on 2.2% of their base pay, with the government covering the full cost of the contribution.

“Where then,” asked Arouri, “is the social justice guaranteed by such a law?”

Dhouib, a member of the General Secretariat of the Palestinian General Federation of Trade Unions, concurred with Arouri's sentiment. He also said that the law would not, as workers and employee unions desire, replace Social Insurance Act No. 3 (2003), which the president repealed in a 2007 executive decree. He added, “This law, in terms of employer participation and in terms of the minimum retirement funds that it guarantees — which do not exceed 50% percent of the minimum wage — would be catastrophic if adopted.”

Majdalani played down Arouri and Dhouib's misgivings, stating, “The law is the culmination of three years of collective discussions and negotiations. Therefore, through common ground, compromise solutions were reached. Thus, the final outcome revolves around balanced formulas that safeguard the interests of all parties involved and affords the required and allowable minimum levels of protection to the interests of all.” Majdalani reiterated that the remarks thus far after submission to the Council of Ministers have not been so deep as to require fundamental changes. As a result, its terms would be difficult to change.

“Having a law, even one that does not satisfy the aspirations of all parties, is better than having no law at all,” Majdalani claimed. Those who disagree with this official position, namely workers and their representatives, question the futility of adopting a law that fails to guarantee workers a pension that affords them a dignified life in the event of disability and old age.

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Found in: workers' rights, retirees, palestinian authority, labor unions, employment

Aziza Nofal, an investigative journalist from Nablus, lives and works in Ramallah as a freelance reporter for Arab and regional websites. She graduated in 2000 from the Department of Media and Journalism at Al-Najah National University and received her master's degree in Israeli studies in 2014 from Al-Quds University. She also works in cooperation with the Amman-based Arab Reporters for Investigative Journalism (ARIJ).

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